Presidential Office: "Exchange Rate Increase is a Common Phenomenon Among Major Countries... Not a Cause for Concern, No Credibility Issues"

Sangmok Choi, Senior Executive, "Maintaining Current Account Surplus Despite Trade Deficit"

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] On the 25th, the Presidential Office stated regarding the rise in the won-dollar exchange rate, "There is no need to worry about a financial crisis or foreign exchange crisis," and diagnosed that "this is a common phenomenon among major countries reflecting the global strengthening of the dollar rather than internal factors of our economy."

Choi Sang-mok, the Chief Economic Secretary, said at a briefing at the Yongsan Presidential Office, "Although the value of the won is falling, the rate of change is similar to that of the euro, pound, and yen." This is interpreted as the Presidential Office trying to prevent the spread of market anxiety independently from the foreign exchange authorities.

Chief Secretary Choi explained, "Two indicators, the foreign exchange stabilization fund bond spread and the credit default swap (CDS) premium, are very favorable," adding, "With significant improvements in foreign exchange reserves and other external safety nets, there is no need to be concerned solely based on the exchange rate level."

However, he emphasized, "Since a rapid rise in the exchange rate affects prices and people's livelihoods, the government is not complacent and is closely monitoring the situation," and pledged timely responses including the implementation of market safety measures.

He introduced that the increase in energy imports from January to July this year compared to the same period last year was $49.9 billion, and the deterioration in the trade balance was $34.1 billion, indicating that the increase in energy imports exceeds the deterioration in the trade balance.

Regarding the trade deficit, he said, "It is due to the rise in prices of the three major energy sources: crude oil, natural gas, and coal," and added, "Even with a trade deficit, the current account balance maintains a considerable surplus. I would like to reiterate that there is no significant problem with our external creditworthiness."

This content was produced with the assistance of AI translation services.